Correlation Between Thor Industries and Magna International

Can any of the company-specific risk be diversified away by investing in both Thor Industries and Magna International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Thor Industries and Magna International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Thor Industries and Magna International, you can compare the effects of market volatilities on Thor Industries and Magna International and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Thor Industries with a short position of Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Industries and Magna International.

Diversification Opportunities for Thor Industries and Magna International

0.18

Correlation Coefficient

Thor Industries  Magna International

Average diversification

The 3 months correlation between Thor and Magna is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Thor Industries and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International and Thor Industries is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Thor Industries are associated (or correlated) with Magna International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna International has no effect on the direction of Thor Industries i.e., Thor Industries and Magna International go up and down completely randomly.

Pair Corralation between Thor Industries and Magna International

Considering the 90-day investment horizon Thor Industries is expected to under-perform the Magna International. In addition to that, Thor Industries is 1.01 times more volatile than Magna International. It trades about -0.1 of its total potential returns per unit of risk. Magna International is currently generating about 0.01 per unit of volatility. If you would invest  4,227  in Magna International on September 27, 2024 and sell it today you would earn a total of  15.00  from holding Magna International or generate 0.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Thor Industries  vs.  Magna International

Thor Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thor Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Magna International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Magna International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Magna International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thor Industries and Magna International

The main advantage of trading using opposite Thor Industries and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Industries position performs unexpectedly, Magna International can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Magna International will offset losses from the drop in Magna International's long position.

The idea behind Thor Industries and Magna International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.